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B oeing 787: The Dreamliner

B oeing 787: The Dreamliner. Seattle, April 17 th 2010.

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B oeing 787: The Dreamliner

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  1. Boeing 787: The Dreamliner Seattle, April 17th 2010

  2. “ Twentyyearsfromnow I believethatrainyday… willbeviewed as one of themostimportantonthehistory of thiscompany and commercialaviation. It… willalwaysberemembered as a daythatfundamentallychangedthewayairplanes are built and howpeopletravel. And itwouldbeseen as a daywhen Boeing once againprovedthekind of companyitis: a company of vision and achivement- a companythatdoesgreatthings” - JimAlbaugh, chiefexecutive and president, Boeing CommercialAirplanes

  3. The 787 Challenge • Facts and features • Outsourcingstrategy: • Supplychainproblems • Potentialrisks • The new strategygidelines • Partnershipsanalysis • Thelaststeps of ourmasterpiece

  4. Revolutionary aircraft 851 orders from 50 clients Main challenges Design outsourcing 50% composite materials Main features 20% less energy consumption 20% less environmental pollution Electric systems consumes 35% less power from engines 30% less maintenance costs 450 new city pairs connected Boeing 787: Facts & Features 787 is the result of Boeing’s efforts to regain aerospace industry leadership

  5. The 787 Challenge • Facts and features • Outsourcingstrategy: • Supplychainproblems • Potentialrisks • The new strategygidelines • Partnershipsanalysis • Thelaststeps of ourmasterpiece

  6. Outsourcing Strategy: Supply Chain Problems • Workforce experience • Charleston • Documentation inefficiencies • Shortage of fasteners Delay of Boeing 787 • Integration challenges • Underestimated computer code (Honeywell International) • Coordination problems • Charleston • Spirit Aero Systems • Job security concerns • Union Strike: Boeing US • Supplier coordination & design • Wing Box: Mitsubishi

  7. Outsourcing: Potential Problems & Risks Political Instability & Regulation Macroeconomic factors Quality Control Outsourcing Strikes & Labor Laws Know-how transfer Strong R&D dependence

  8. The 787 Challenge • Facts and features • Outsourcingstrategy: • Supplychainproblems • Potentialrisks • The new strategygidelines • Partnershipsanalysis • Thelaststeps of ourmasterpiece

  9. The 787: A shift from traditional strategies Strategy Guidelines 787 Planes Structure Supply • Strong Manufacture & Design Outsourcing • Suppliers financing their own R&D expenses. • Great incentives for costs reductions. • Market assistance to Boeing • Air Transportation as a key advantage • Lighter & advanced composites • Over 20%- 40% cost reduction per day • Global Integration of suppliers • Project life cycle management system. • Reliance on outside suppliers for assembly (over 70%) Internalassembly at Boeing Outsideassemby Boeing Vision for 2016: “From a wrench-turning manufacturer to a master planner, marketer, and snap together assembler of high tech planes”

  10. The 787: A shift from traditional strategies Strategy Guidelines 787 Planes Structure Supply • Strong Manufacture & Design Outsourcing • Suppliers financing their own R&D expenses. • Great incentives for costs reductions. • Market assistance to Boeing • Air Transportation as a key advantage • Lighter & advanced composites • Over 20%- 40% cost reduction per day • Global Integration of suppliers • Project life cycle management system. • Reliance on outside suppliers for assembly (over 70%) Othercountries 4% Italy 26% USA 35% Japan 35% Boeing Vision for 2016: “From a wrench-turning manufacturer to a master planner, marketer, and snap together assembler of high tech planes”

  11. The 787 Challenge • Facts and features • Outsourcingstrategy: • Supplychainproblems • Potentialrisks • The new strategygidelines • Partnershipsanalysis • Thelaststeps of ourmasterpiece

  12. The Boeing 787 & Main Suppliers

  13. Outsourcing Strategy: Partnership Analysis Positive Aspects Negative Aspects • Highly experienced partners • Well known for their aircraft components manufacture & design. • Highly technologically based • Strong investments in R&D • Industry leaders • Consolidate relationship • Mitsubishi, Kawasaki & Fuji played a key role during the Boeing 777 project. • Alenia participated in the Boeing 767 manufacture • Rolls Royce & GE as traditional partners for engines. • Big corporations located in solid economies • Low macroeconomic and political risks • Consolidated corporations in terms of market share, profits and quality. • Lack of expertise regarding assembly of components. • Inexperienced workforce in design and assembly • Weak direct communication between partners. • Potential future competitors • Risk of feeding future competitors through know how transfer.

  14. The 787 Challenge • Facts and features • Outsourcingstrategy: • Supplychainproblems • Potentialrisks • The new strategygidelines • Partnershipsanalysis • Thelaststeps of ourmasterpiece

  15. The Boeing 787: On schedule • Extend control & coordination of the outsourced supply chain • Acquisition of North Charleston factories to meet committed deadlines • New assembly line under construction • The production of 787 will go up to 10 planes/month in 2013 • The production of the derivative 787-9 on schedule • Technical problems solved • Composite materials behavior under flight stress proved to be reliable. • Wings, fuselage, electronic systems performed excellent during the test flights. Time commitment • Low likelihood of Union Strikes • High involvement of machinist & engineers (e.g.: First Flight) • Higher compensation and other benefits

  16. Long-termstrategy • General view • Where are wenow? • Long-termstrategy drivers • Redefinition of thecorebusiness • International markets • Integration, innovation & coordination

  17. Long term strategy Objective: “At Boeing, we aspire to be the strongest, best and best-integratedaerospace-basedcompany in theworld—fortoday and tomorrow.” (AR 2009) Where is Boeing now? Boeing aspiration • Strengths • Weaknesses • Opportunities • Threats “Peopleworkingtogether as a global enterpriseforaerospaceleadership” (Vision 2016) How? • Redefine Boeing’sCore Business: R&D • International markets: New clients • Greatersupplychainintergration

  18. Long-termstrategy • General view • Where are wenow? • Long-termstrategy drivers • Redefinition of thecorebusiness • International markets • Integration, innovation & coordination

  19. Where are we now? Strengths & weaknesses Boeing’s future strategy must retain the company’s strengths … … and turn weaknesses into opportunities • Experience and reputation • Thecapacitytoanticipateto new markettrends. • Good international relationships • High technical knowledge that allows constant product innovation • Most part of Boeing`s revenues derive from alimited number of clients. • Difficulties to meet plane delivery deadlines; high dependence on: • Suppliers • Subcontractors • Regulatorycerifications

  20. Where are we now? Threats & opportunities … and concentrate efforts on actual opportunities Boeing’s must learn to avoid current threats … • Outsourcing of R&D • Transfer of knowledge: actual suppliesmaybecomefuturecompetitors • Lose of control and quality standards • Possible new comptetitors • Provide new services (i.e. maintenance) • Explode new markets • Asia-Pacific • New trends: • Low operating costs • Environmental friendly airplanes • More cargo capacity • …

  21. Boeing long-term strategy drivers - Experienceand reputation - Capacitytoanticipatetomarkettrends - Goodinternationalrelationships - Hightechnicalknowledgethatallowsconstantproductinnovation • - Most part of Boeing`s revenues derive from a limited number of clients. • - Highdependanceon: supplier, subcontractors and regulatorycertifications • - Highdependenceonmarketconditions - Outsourcing - Transfer of knowledge - Lose of control • - New geographicmarket: Asia-Pacific • - New trends: • Lowoperatingcosts • Enviromentalresponsibleproducts • More cargo capacity

  22. Boeing long-term strategy drivers - Experienceand reputation - Capacitytoanticipatetomarkettrends - Goodinternationalrelationships - Hightechnicalknowledgethatallowsconstantproductinnovation S • Redifinethecorebusiness: R&D • International markets: new clients • Greatersupplychainintegration • - Most part of Boeing`s revenues derive from a limited number of clients. • - Highdependanceon: supplier, subcontractors and regulatorycertifications • - Highdependenceonmarketconditions W - Outsourcing - Transfer of knowledge - Lose of control T • - New geographicmarket: Asia-Pacific • - New trends: • Lowoperatingcosts • Enviromentalresponsibleproducts • More cargo capacity O

  23. Long-termstrategy • General view • Where are wenow? • Long-termstrategy drivers • Redefinition of thecorebusiness • International markets • Integration, innovation & coordination

  24. Boeing’s core competence… Integration, innovation and coordination in the aeronautic industry

  25. Boeing: Integration, innovation & coordination Boeing’scompetitiveadvantageisbasedonitsknowhow and itsabilitytopredictmarkettrends Current 787 outsourcingstrategymustberevised and redefined in ordertoguranteethecompany’ssustainablegrowth Outsourcing must be limited to manufacturing processes while retrieving R&D inside the company.

  26. Boeing: Integration, innovation & coordination Innovation Integration & coordination • Environmentally friendly production • Longer distances: reduce operating costs • Improve passenger experience at flight • Greater cargo capacity • Efficient fuel consumption • Suppliers working together: no delays, no communicationproblems… • Highersupplychainintegrationwillpermittosatisfythefuturedemandefficiently. • Small supliersshouldconcentrateontheproduction of selectedcomponents Transmission of value between Boeing and its suppliers creates a win-win sountainable long-term relationship

  27. Boeing & International Markets Asia Pacific region presents the greatest aerospace market and economic growth

  28. Boeing & International Markets Boeing willhavetoconcentrateitsefforts in thedevelopment of the single-aisle and twin-aislecategoriesas representedby B737 and B787

  29. Boeing & International Markets • CommercialAircraftCorporation of China • Directcompetence: C919 (2016) for B737 • Not total developmentuntil 10 to 20 years • Getadvantage of thismargin • Createlong- termrelationthroughthemantainance and update of the actual models

  30. Boeing’s long term strategy: Integration, innovation & coordination Where is Boeing now? Boeing aspiration Boeing’s long term strategy • Long term competitive advantage: • Focusoninnovation: satifaction of currenttrends and forecast of futureneeds. • Integration and coordinationof thesupplychain in ordertorepondefficientlytomaketdemand • Capture internationaldemandfrom new markets: Asia-Pacific

  31. Conclusion

  32. Q&A Thank you!

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